Week 1 Assignment BUS 670.docx - 1 Legal Underpinnings of...

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1 Legal Underpinnings of Business Law Ashford University BUS670: Legal Environment
2 Legal Underpinnings of Business Law Entity Type Sole Prop. Partnership LP Corp. LLC Exposure Liability Owner the sole proprietor and as a result, there is unlimited personal liability for anything that this business would incur. There is unlimited personal liability risk to the owner, the owner is also in absolute control of the business. It is recommended to have good insurance policies as well as solid contracts in place (4 Most Common Business Legal Structures , 2017). A general partnership is much like a sole proprietorship in which the owners have unlimited personal liability risks. The big difference is that each partner is jointly responsible for the liability instead of just one owner (4 Most Common Business Legal Structures , 2017). A limited partnership is protected from the liabilities that a general partnership would face. There are also situations where a limited partnership exists and someone new wants to join in as a general partner. In these situations, the new person should only join as a general partner under an LLC instead of their personal name to avoid liability issues. (Holmes, 2017). Shareholders of a corporation are protected under limited liabilities. They cannot lose more money than what is invested within the corporation. The business itself is liable for its risks instead of the individual shareholders. Owners/shareholders must be careful to not mix up their personal accounts and the business accounts (4 Most Common Business Legal Structures , 2017). In a limited liability corporation, o assets belong the company risk instead o owner’s perso assets. LLC owners shoul careful to kee personal and business acco completely separate (4 M Common Bus Legal Structu 2017). The Tinker & Tailor businesses are being sued for a breach of contract. The business that are under attack are: Tinker’s Home Security Service (sole proprietorship), Tinker & Tailor’s Home Security Service (general partnership), Tinker & Tailor’s Home Security Service (LP), Tinker & Tailor’s Home Security Service, Inc. (corporation), and Tinker & Tailor’s Home Security Service, LLC (LLC). The owners of each company will face different liabilities when it comes to facing this lawsuit. Below is a matrix that outlines the exposure liability risk that is associated with each company under the Tinker and Tailor family.

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